British Airways Owner Wins Cabin-Crew Deal at Spanish Arm Iberia

Feb. 25 (Bloomberg) -- British Airways parent IAG SA said
cabin crew at unprofitable Spanish arm Iberia have joined pilots
in agreeing to raise productivity as part of a turnaround
program eliminating more than 3,000 jobs.

The pact, which still has to be ratified, retains a 14
percent cut in flight-attendant pay while eliminating a further
4 percent reduction imposed after the failure of earlier
productivity talks, London-based IAG said in a statement today.

The cabin crew accord “is a key step in building the new
Iberia since it lightens its cost structure and lays the
foundation for profitable growth,” he said. “All employees are
accepting changes to help give the airline a better future.”

The agreement in principle, which runs through 2017,
increases duty days and provides the airline with greater
flexibility to handle peak summer demand, Iberia said. Working
practices will also be amended for medium and short-haul
operations, while pay scales will be adjusted to “market
levels” for new staff and recalculated for senior employees.

IAG, as International Consolidated Airlines Group SA is
known, has said investments to modernize Iberia’s fleet,
including purchasing more Airbus Group NV A330 long-haul jets
and adding the A350 model, are contingent on the unit achieving
sustainable profitability. Group CEO Willie Walsh has also set
up Iberia Express with less-generous employee contracts and
acquired control of Barcelona-based discount carrier Vueling SA.

A turnaround at Iberia is a key part of Walsh’s plan to
lift IAG’s operating profit to 1.8 billion euros in 2015. Walsh
said in October that the unit should turn profitable in 2014.